Defence giant Babcock International has seen half-year profits drop by nearly a fifth, but put faith in its turnaround strategy as it secured a raft of new projects.
The group – which is the Ministry of Defence’s second largest contractor – reported an 18% fall in underlying pre-tax profits to £202.5 million for the six months to September 30.
Statutory pre-tax profits more than doubled to £152.5 million from the £65.1 million seen a year earlier when it was hit by exceptional costs.
Boss Archie Bethel insisted the firm’s “strategy is delivering”, with its order book rising to £18 billion thanks to recent wins including contracts to build the Type 31 warship for the UK’s Royal Navy and provide training to London’s Metropolitan Police Service.
We are doing what we said we would doArchie Bethel, Babcock chief executive
It secured around £3.5 billion of contracts overall in its first half.
Mr Bethel said Babcock remained on track for the full year, though shares dropped 5%.
He added: “Today’s results show we are doing what we said we would do.
“Our delivery in the first half is in line with our expectations, with good performance across most of the group.”
Mr Bethel is leading a revamp to boost earnings growth by up to 4% over the next five years as it looks to turn around its fortunes.
He outlined the plans in June, a month after the firm revealed a 40% slump in annual profits and warned over the next year’s result.
As part of its target, it said it would look to increase total revenues from its three key markets – defence, emergency services and civil nuclear – to more than 85% from around 75% currently.
The firm also plans to increase revenue from overseas from 30% of group turnover currently to more than 40%.
In its half-year figures, the firm reported a 5% fall in underlying revenues to £2.5 billion as major projects such as the aircraft carriers came to an end and as it took costs for buying planes as part of its French Fomedec contract.
With the impact of these stripped out, it said revenues edged 3.6% higher.
Results showed better performance from its marine business offset weakness in the aviation sector.